Articles

Negotiating your home sale does not have to be intimidating. By learning how real estate negotiations work and how to apply proven techniques, you can get the price you want from the buyers.

KNOW MORE THAN YOUR BUYERS


The two major elements of negotiation are motivation and skill.

A motivated buyer wants the best deal, and you, the seller, want the best price.

A skilled negotiator is an expert at working under the pressures of competition, time, information, and communication.

WHAT MOTIVATES A SELLER

Time on the market

Relocation

Pressures of maintenance and upkeep

Emotional and mental stress, especially during divorce

Selling your home is a multifaceted process. To be a strong negotiator, you must avoid allowing emotions to overpower the situation to the point where you compromise and settle for a lower price.

Worrying about paying the mortgage while the home sits on the market for six months or having to move out of state are prime pressure points for sellers. Maintaining a home in showing condition for months on end can physically wear someone down. For some sellers, finding the right buyer can be mentally and emotionally straining. Knowledgeable buyers will push to the limit to get the price they want.

WHEN THE COMPETITIVE PRESSURE IS ON


When facing an informed buyer, remember that the party with the most options will win the negotiation. The buyer may have researched your home’s history on the market. If you have relocated, he may assume that you’re desperate to sell and will take his offer. On the flip side, if he thought you had three other buyers waving higher offers, he would have to raise his price or walk away. Sharpen your senses to know when a buyer does not have other property options.

Perceptions have a profound influence in negotiations. If an interested buyer believes you have rejected offers that were higher than his, you have the upper hand to pressure him to offer more. On that flip side, the buyer may inform you that he is interested in other homes, pressuring you to accept his price. The key to being a power negotiator is to stay calm and focused during the process to avoid costly mistakes. Knowing your buyer’s motivation without exposing yours will give you the edge.

LET TIME BE ON YOUR SIDE


Time pressure is inescapable in the world of sales. It is evident during antique auctions, construction job bids, and car sales.

Time is a powerful negotiation tool. Real estate agents advise buyers that a seller under pressure to sell will provide the best bargain. For this reason, smart home shoppers will obtain as much information about the seller as they can get.

For example, if a buyer knows a seller is in foreclosure and must sell before losing the property, the buyer has the upper hand. He knows the seller is under a time constraint and will use that, making low-ball offers or perhaps appearing indecisive or by not promptly returning calls and messages.

Buyers look for time-sensitive situations to push their price. Sellers who are behind on mortgage payments, recently retired, or are under contract for another home dependent on this home sale are candidates for high-pressure tactics from savvy buyers. Buyers may come to you and ask questions to find out if any of these situations apply to you. Eagerness to please them may be read as desperation.

Buyers also play the waiting game. In real estate, acceptance time can be a powerful tool in price negotiations. From their perspective, the longer the house has been on the market, the more flexible the seller will be. The same applies to negotiations. The more they stretch out the time spent in negotiating the sale, the more likely they will get the price they want.

Buyers will invest time with you to create relationships, trust, and willingness on your part to agree to their terms. The advantage that may arise for you is that they may not want to walk away empty-handed after gaining your trust. By exercising patience, you can maintain your position on terms and price.

KNOWLEDGE IS POWER

Information is the key to real estate negotiations. The more information the buyer can glean from you, the more pressure you will face. The more knowledgeable side will overpower the less informed at the bargaining table. The more insight the buyer has into your motivation to sell, the more powerful he is at negotiating.

Don’t avoid questions. Don’t be unfriendly or uninterested. However, remember this is a professional transaction between strangers and don’t be unnecessarily forthcoming, either.

When the buyer asks what appears to be a tough question that may relate to an offer, she is looking for direct answers and your reactions. Stay professionally reserved and avoid showing anxiousness to sell.

A simple but effective technique to handle a tough question without giving out information is to answer with another question. If you are asked if your home has been long on the market, simply answer imprecisely, e.g., “Not long.” Then calmly ask the shoppers how long they have been looking. Their answers may empower you with information about their own stress points.

When asked why you are selling, answer with vague reasons, such as downsizing or eliminating stairs. Again, turn the tables by asking them the same question. To learn if you have any time constraints, a buyer might ask how soon you want to move. Tell them you’re flexible, even if you would really like to move immediately. Next, it’s your turn to ask them how soon they want to move.

Directing the question back to the buyer maintains your control of information. What you paid for your house does not have a bearing on current market value, so if the question comes up, simply smile and say you won it in a bet (knowing the buyer has probably checked county records for the previous sale price).

Facing questions on the pricing of your home should not be difficult if you have put serious thought into your asking price. If you based it on professional market value estimates, tell them. Do not forget to point out recent sales of comparable homes and the improvements you’ve made. Competitive offers from other interested buyers is a concern for a home shopper. If they ask you about this, briefly state that there is interest but “nothing on paper.” Don’t be specific about where you are with other prospective buyers.

Buyers may be inquisitive as to why your home has not sold yet, and you can tell them you are waiting for the perfect buyer (like them!). Almost invariably they will ask for the lowest price you will take, or if the price is negotiable. Let them know you had not much time to think about it. In turn, ask what price they had in mind, adding “as long as the offer is negotiable.”

Dealing with the buyers, keep this objective in mind. Answer questions thoughtfully but vaguely, without revealing much. Managing your responses by asking them questions in return works well in the situations discussed above. Always attempt to get the other party to reveal their thoughts.

On a side note, some real estate agents will want information from the listing agent. If a buyer agent contacts your agent, he may be looking to exchange sensitive information to get the sale. Have a discussion with your agent so you can trust him or her in all phases of the sale.